As one reads through the writings of Andrews
and Babson what is quickly discovered is that they are strategies
for making trades that are several weeks in length. In my writings
there have been numerous articles about finding entry and exit
points with Andrews and Babson Techniques. Some of the techniques
include Babson Reaction Lines which focus upon the location of the
end or start of short term moves and long term moves. Techniques
using the Andrews pitchfork parallels and sliding parallels are used
for finding entry points that are short term or long term in nature.

In a recent article in Tradersworld readers
discovered the existence of a little known technique called the
Babson Reversal Line. The details on this line are only in the
expanded course. This is a technique designed to find reversal
points near the end of longer term moves. The problem with this
indicator is that it alone does not tell you how long the reversal
will hold. With a very strong trend, this can be a short time
period. In addition there can be several bounces off of the line.
This is illustrated in November time frame of the the ES chart below.

In a prior
article the readers of Tradersworld magazine were introduced to
Babson Reversal Lines. These are selectivly used to determine the
area where a reversal in trend is likely. They are most reliable
when used in conjunction with other Andrews lines and trading
concepts.

Since then the
question has come up………How is Andrews Pitchfork used in conjunction
to find the start of serious corrections?

In the above gold chart you can see that price
made it to the Median Line and Babson Reversal Line and reversed.
What is not so obvious is that Advanced Andrews Students also see a
Double trouble in this pattern prior to price reversing at the
Babson Reversal Line. The double trouble signal is used to determine
when the trend is in trouble and about to have a significant
correction. The double signal is discussed in various videos in the
expanded course.

The reversal in the Ultra Bond chart shows the
same signals, to the trained eye. Price went to the ML and the
Babson Reversal Line.

In the Natural Gas one can see that the price
made it down past the far parallel and down to the Babson Reversal
Line. While the Babson Reversal Line appears to also be near no
consequential pivots, it is only useful near the lows and not near
the other pivots at higher prices. What we have found is that the
Babson Reversal line needs to be used in conjunction with the median
line and the double trouble signal to signify strong reversals. The
BRL is only drawn AFTER the Andrews line has been reached. This is
because otherwise one may be misled into trading at an earlier
potential pivot point. Near the end of moves ( major pivots ) there
are often multiple BRL’s.

In the Jap yen chart above it is clearly
indicated that price made it down to the ML and Reversed and up to
the far MLH and reversed.

As you can see in each case above in the ES
price went up to the Median Line and reversed. In addition the other
necessary indicators are also triggered at the point price makes it
to the Median line and reverses for a 5-15% quick correction.

Is there a time when this is likely to not work
out favorably? The above Aussie $ chart shows that price went down
towards the Median Line and reversed at the BRL. What did it fail to
do in this situation? Can you spot the difference?

As the US Congress is
about to vote on the tax
bill and you noticed that in the ES there was a double trouble
signal and an MLH above price here on the daily es chart,in addition to a Babson Reversal line……..what would you
conclude? Below is a one hour chart, about a week later.

The above chart high price was
exceeded the next day. This shows the degree one can manage risk.

Does the Double Trouble signal only occur at
the end of a thrust move? Does it occur at the end of corrections?
The double trouble signal was first discovered, by this writer, at
the end of a correction that was the start of an incredibly strong
and long thrust wave in the hogs. Above is a gold chart in a
correction, where the double trouble signal was discovered.

What is the take away? When you see a double trouble
pattern,watch for a reversal at the Babson Reversal Line
If
it was in a thrust wave, look for the next move to be a correction
of about 5-25%.

At this point price went past the upper H and hit warning line #1.
The next warning line is at about 2690. The final top in this cycle could come after price hits
the second warning line or a second hit of the first warning
line, which would be at a price that is shown as a high on the last
chart below.